 Aloha, and welcome to a Hanukako. We're here every week on the Think Tech Hawaii broadcast network. I'm Kili Ikeena, president of the Grassroot Institute. Well, if you've been in Honolulu, or in fact, anywhere across the country, you'll know that the Honolulu Rail has been the talk of the town, especially during the last legislative session. Well, whether you are pro-rail or anti-rail, you're probably concerned about the cost, the escalating cost of this rail project, as well as how it's being managed. Well, there's someone who knows all about that. He's an expert who has shown that he cares greatly about public service by being a voice on many issues, sometimes controversial, but always authoritative. I have today Professor Randall Roth of the University of Hawaii's Richardson School of Law, and he's going to share some of his insights so that you'll know more about the Honolulu Rail. My guest today, Randy Roth. Randy, welcome to the program. Thank you. I'm always glad to talk with you because you know what you're talking about. I try. It's comforting for your students, I'm sure. Well, I do my best. You know, we're going to talk a little bit about this later on in the program, but I want to write at the front to let you express some of your deepest concerns about the Honolulu Rail project. Well, I'm not an expert on transportation and transit, and wouldn't normally spend nearly the kind of time and energy that I've put into this project. But from my standpoint, what's gone on is a form of fraud. As best I can tell from the very beginning, there's been more than just political spinning. I think it was really clear at the beginning that this was going to cost far more than the 2.7 billion that they initially said the 34-mile route would take. Then they increased it to 3, and then they increased it to 3.4, and then they increased it to 4.2, and et cetera. Now it's at roughly 10. Now, you're not saying that this is due to what you coined, a phrase for a book series, price of paradise. It's not just inflation and the cost of living that is raising these costs for the rail. You're saying it's fraud. You don't miss words. I think it was reasonably clear at the beginning, but now with hindsight, I think it's absolutely clear that they grossly underestimated the cost of construction. I think they've grossly overestimated the amount of ridership that it would have. They said that rail would reduce energy costs when in reality we now know from US Department of Energy data that the per passenger mile use of energy with this rail system would be greater than what it is today with one person in one car. That may sound counterintuitive, but it's because except at rush hour, the train's going to be running practically empty. Traffic congestion, from day one they sold this as a solution to a very real traffic congestion problem on Oahu, but it isn't a solution at all. In fact, if you read the fine print in the environmental impact study, the city's own expert said that traffic congestion in the future with rail will be worse than it is today. In our introduction now, just a minute and a half, you've presented a legal case almost, showing your very strong mind. I've just gotten started and the point is that it's really in my opinion a classic case of fraud, intentional misrepresentation. So I want to make sure we've got this right, because you're not using your words in an informal sense. You know exactly what the meaning of fraud is, and you're applying it to the Hanna-Lulu Rail project. We're going to come back and we're going to talk with our guests, with our audience about that, but let's go back for some background information. So somebody has lived under a barrel for the last five years, and wakes up today like Ruppelstiltskin and sees these huge pillars being erected across town and so forth, and needs to be introduced to the rail. What exactly was the rail project in its inception? Why in the world did we launch that? Right. Well, going way back, Frank Fosse tried for many years to have what at the time would have been a heavy rail system. The terminology has changed a little bit today, but when you've got an elevated system like this one, it would fit the old definition of heavy rail. I make that distinction because we've got kind of like the worst of both worlds. We've got the extreme cost of an elevated heavy rail system, but the plan is to use the cars that are the same size as a light rail system. So we've got the lower capacity, the higher costs. The worst of both worlds. The worst of both worlds, and when it was presented to the public, it was presented as something that would cost a fraction of what now even the city says it's going to cost. Even the city acknowledges that it's 100% over what was estimated at the time the federal government agreed to give $1.55 billion. What problem was the rail supposed to solve for the residents of Honolulu? Well, the city gave the impression, when I say the city, this kind of started with Frank Fosse, but Mufi Hanuman, when he was elected virtually overnight, he threw out the bus rapid transit system, which an environmental impact study had concluded was the preferred option for Hawaii, that it was far less expensive than rail, and there were many other advantages to it. Mufi Hanuman threw it out, set up a process by which it was preordained that we would end up with elevated heavy rail, sold it to the public by saying we've got this terrible traffic congestion problem, which we do, and suggested that elevated rail would fix that, and it wouldn't. The draft of the environmental impact statement came out the day before the vote, and the vote it was a very slim majority, 50.6, so less than 51% of the voters opted for rail, but it was based upon a fraud in terms of what it would cost, in terms of how many riders it would get, in terms of how much energy it would save, in terms of what the impact on traffic congestion would be. Earlier I mentioned that the environmental impact study says that traffic congestion will be worse in the future with rail than it is today, and to most people that sounds nonsensical. Obviously, it's going to be better. If you look around the country, starting back in the 60s, 70s, 80s, when a lot of cities were adding rail in the bigger cities, elevated or heavy rail, sometimes under the surface of the earth, of the ground, the percentage of people using public transit in almost all of those cities, after rail was added, was less than the percentage of people using public transit before rail was added. And you look to see, well, why is that? There are a number of explanations, one of which is, traditionally what happens, a city spends so much money on rail that they have to cut back on the bus system, and then they convert all the express buses to a feeder system, to where you get on a bus just to get to a rail station, and then you have to go from a rail station on a bus to where it is that you wanted to go. You look at how these things have actually played out in other places, and you realize that how it was presented in Hawaii is just very different from how it's likely to play out, and in fact, we now have some time has passed, they've done some construction where 100% over budget so far is building, and we've got a final environmental impact statement. You look at all the information we have now, and it's just real clear that there was a great deal of deception from the beginning. And you're saying that if the problem was bad traffic in Honolulu, that we already had a solution that was preferred to the rail, which was our bus system, were there other options and other ways of dealing with the growing traffic problem in Hawaii that would have been better than launching on the rail project? Absolutely, and I would just say that all of the rail critics that I know, Cliff Slater, Ben Cayetano, Panos Prevoderos, and long list of people who are known publicly as rail critics, they all believe that we've got a serious traffic congestion problem. They all believe the city needs to spend a great deal of money in addressing that problem, but they all also agree that this rail project that the city is embarked on is not a solution. Not only is it not the best solution, it's not a solution. But there are solutions out there. There are a number of cities around the world, but many of them in the United States, that are doing these toll roads, hot lanes, if you will. And it doesn't have to be a toll, but the theory is let's have those people who want to pay a toll to have a guarantee that they're going to be able to drive the speed limit, let's have them pay for it, and that will actually reduce traffic congestion on H1 and every place else where cars are now oftentimes congested. But like I say, there are many variations on it. The point though is if we had a guideway that had two lanes coming in to town in the morning and going out in the afternoon, it would eliminate our rush hour congestion problem. And it could be paid for by the people who directly use it. And everybody else would benefit greatly without having to pay a penny. So you're saying that there were better and more cost-effective solutions to our traffic problem that were known at the time the rail project was launched. Absolutely. In fact, the Bus Rapid Transit one, as I mentioned in UConn, we had actually done, we in Hawaii, there had been an environmental impact statement and it compared it to rail. And it had determined that it was the superior option until Mufi Hanuman came in, at which point in time he changed everything. So then why? Why is it that we abandon better solutions? Why is it we abandon more cost-effective approaches and soar from $2.7 billion of projected costs to well over $10 billion now? Yeah, Piano's Prevodero says it'd be $13 million. All right, by the end of the show today, why so why? Why did this happen? Yeah. And you can step back and look at it from any angle, whether it's political or whether it's the people of Hawaii. Well, what was it that got us on this track? I point to Mufi Hanuman and his managing director, Kirk Caldwell, who was self-described as the point person for rail. So there were some political individuals who drove this. What did they get out of it? Or what would they have gotten out of it? I don't want to be unkind, but looking at it as objectively as I can, I think the more money that was going to be spent from their standpoint, the better. They convinced the trade unions, for example, that this was going to create a huge number of jobs. We now know with hindsight that it's created about one-tenth the number of jobs that they said that it was going to create. But when you're spending billions and billions and billions of dollars, far more than you would have spent on a bus rapid transit system, far more than you would have spent on these lanes that any kind of vehicle could use going in and out of town during rush hour, when you're spending huge amounts of money, it's ending up in somebody's pocket. And the people who are going to be the recipients of what I would describe as excess spending, they know who they are. And they're real good to the politicians that are promoting those kinds of spending projects. So I think it's all roads lead to politics when it comes to Well, you're talking about a crony-based system that benefits individuals at the cost of the public, and you're willing to say that sort of place. I really believe that. And you've got groups like PRP that have millions and millions and millions of dollars that they are spending. Pacific Resources Partnership. Yes, to Smara Ben-Kaitano when he was running for mayor. They spent millions of dollars and some of the federal money was spent by the city, I think wrongfully, in promoting rail at the time of the ballot question. So you had this huge amount of money promoting it in a very, in my opinion, dishonest way in terms of what it would cost, how many riders there would be. The damage to the INA, you go down the long list of just the- Well, I'm going to stop your list here and ask if you'll be willing for us to go on a break. And after that break, would you let us know exactly where the fraud took place as we went from a few years ago to today? I'll do my best. Thank you. My guest today is a fascinating analyst of what has taken place with the rail project in Honolulu. He's going to talk more about how it's really a case of blatant fraud when we come back from this short break. I'm Kaley Iakina on Ehana Kako with Think Tech Hawaii. Don't go away. This guy looks familiar. He calls himself the ultra fan. But that doesn't explain all this. What? He planned this party, planned the snacks, even planned to coordinate colored shirts. But he didn't plan to have a good time. Now you wouldn't do this in your own house, so don't do it in your team's house. Know your limits and plan ahead so that everyone can have a good time. Welcome back from our break. If you saw the first portion of today's program with Randy Roth, your head may be reeling thinking, what are we doing here in Honolulu with this rail project? I'm Kaley Iakina, president of the Grassroots Institute, where we like to say Ehana Kako. You know there's a venerable saying here in Hawaii called a Pule Kako. We often open public events with a prayer. Let's Pule, pray together. At Grassroots, we like to say, let's Hana. Let's work together, Ehana Kako, working together to build a better economy, government, and society. And that's what Think Tech Hawaii is doing. We tip our hats to the broadcast network that produces about 35 hours of original content that gets broadcast all over the world. Now back to Randy Roth, professor at the University of Hawaii Richardson School of Law, for his insights into what's gone wrong with the rail. Well, Randy, you didn't pull any punches in our first part of the program. You called it fraud. And basically, when we talk about fraud, what's the definition of fraud? Actually, fraud is defined differently in a variety of contexts. I'm using it to describe intentionally misleading whomever it is that you're communicating with in an attempt to get them to do something that but for that intentional miscommunication or that intentional deception they wouldn't do. So if I'm trying to sell you a used car and I hide liabilities about that used car, I don't tell you things that you really have a right to know. That's fraud. Yeah, I mean, our elected officials in particular, I think, should feel not just a legal duty, not just an ethical duty, a moral duty to be reasonably honest, to make an attempt. You can kind of lean this way that way and be an advocate for something you believe in. But I think, especially with the passage of time, we look back and in my opinion, there was intentional deception on multiple fronts. I think if we were a community that had what I'll call a political balance, say a two-party system, I think there would be a loyal opposition that would be saying, how in the world could this happen and would be demanding, for example, an audit of rail. The city asked, oh, acts like, gee, it's going to cost double what we thought it was going to cost. Who could have guessed that costs would increase like that? Well, you look at the statistics, the data that the federal government provides, and costs of construction of highway projects, for example, has gone up only 7% over the last seven or eight years. It's an unusual period of time of relative stability so far as civility, so far as those costs are concerned. They said, well, we had these lawsuits. Well, we can document that the federal lawsuit costs the city just a few million dollars. The state lawsuit that forced them to hold off in construction for 13 months, that cost 39 million. But those are tiny, tiny numbers compared to what they've already acknowledged as about $5 billion of cost overruns. There isn't anybody in the state, the legislature, is talking about giving them what would amount to a blank check right now. Well, it sounds like this has been a feeding trough for those favored contractors. So what is one area in which you can clearly document that this has been fraudulent? Well, maybe I'm asking for you for a high standard because you're a law professor. Take, for example, cost. In 2010, Governor Lingo commissioned a study by an independent group. She asked them, what do you think this is going to cost? They came up with numbers that the city laughed at. The city said, that's ridiculous. And the city said, these people don't know what they're doing. Well, now with the passage of seven years, we look at that. And those guys just hit it on the nose. They were a little less than what it looks like it's going to cost. But they were very close. And the point I'm making is that the information at that time, 2010, was there. And independent experts looking at it and saying, here it is, the city didn't want anything to do with that. You look at the ridership estimates that the city has come up with. And then you check into the assumptions that they've made in doing this. And it just doesn't hold together. You look at the claims they made on traffic congestion reduction, the claims they made on energy savings, the claims they've made in terms of the problems that are likely to occur with the EV, with the bones, as they get close to the downtown area. When you get into the downtown area, for example, you're going to have a lot of that construction on fill land where you can't just drill a hole and put in your column. You've got to have this giant space with piles all over and then a cap on top of that. And in that area, nobody knows exactly where all the utility lines are. Utility companies, they don't want anything to do with this. They know it's going to be an absolute mess, going to cost way more than what the original estimate was. And so my point on this is, with the passage of time, it's becoming clear and clear that they not just got it wrong, but they, in my opinion, intentionally got it wrong. And the problem is, by the time a legally airtight case can be put together, those politicians are long gone. And the taxpayers are stuck with a wide elephant, just maintaining, even if somehow or another, the rest of this rail system could be put in place for free, the cost of maintaining it is going to be an extreme burden to the people of Oahu. And whenever I talk to people who are kind of not sure on rail, I say, well, are you planning to ride it? And oftentimes they'll say, well, yeah, at least some of the time, I'll say, OK, how are you going to get to the rail station? Where's the nearest rail station? How are you going to get there? And if they say, well, I'll drive and I'll say, well, there's no parking there. Depends on which station it is, of course. The point is that when you walk people through, whether it makes any sense for them ever to use it, it just doesn't. And yet millions have been spent selling this as something that is going to have people flooding the stations. Transit-oriented development, the theory is that developers are going to want so badly to build living units and commercial spaces around the stations that they'll help pay for the rail. Well, not only have they not stepped up to help pay for it, they haven't come up with anything they're willing to do unless there's a big subsidy and all kinds of waivers of environmental laws that are there for good reason. So the whole notion of transit-oriented development, instead of having dense living around the station, you look at the very first station it's out in the middle of a vacant field now. And even when that area is developed, it's going to be a sea of single-family housing, which is the exact opposite of what transit-oriented development is supposed to be all about. So it's just a long list of pieces of evidence that, to me, when you put that puzzle together, it says we've been had. We the taxpayers of Oahu. You claim that the fraud is intentional by definition. We're talking about the energy costs, the maintenance costs, the EV, the Hawaiian Bones. And we just keep going down this list of things that really should have been dealt with in any planning process at the front end. So what's the reason for that bad planning? Again, it was just an attempt to deceive, to hide the actual costs in order to sell the rail? This is the irony of this. The only defense I think the city has right now to this accusation of what I say amounts to fraud is incompetence. Yes. Their defense is, well, we were really, really, really bad at estimating costs. And we've been really, really bad at building this rail system. And we've been really, really bad. We didn't measure real well. And so we've got it too close to the power lines. And so that's going to cost an extra half billion dollars. How could they claim that? Aren't there standards for planning in any discipline whatsoever? If architectural standards, engineering standards, professionals have to meet certain best practices. If we had some competition in the political realm in Hawaii, and Kelly, I don't care which party it is, if you've got total dominance by the Republicans, or total dominance by the Democrats, they're not good at holding each other. Democrats are not good at holding Democrats accountable. Republicans are not good at holding Republicans accountable. If it weren't for what I'd call the political climate in this island community of ours, there would be people from the legislature right now saying, what do you mean you want us to give you billions more? You haven't yet begun to explain why this thing has cost so much more than what, just two years ago, you were in here at the legislature telling us this thing was going to cost. Let's look at a potential solution to us digging ourselves deeper and deeper into trouble. We've got about a minute left, Randy. You mentioned the potential for an audit. What kind of audit, and who would conduct this audit if it were going to make any difference? Right. The audit needs to involve numbers, just to figure out where did all these cost-over run come from, but also needs to take a look at the quality of management. We've had huge turnover inside Hart and the organization that's actually building on the board, the CEO, senior positions all the way down. But also, part of that audit has to be a cost-benefit of analysis of finishing rail or stopping at Middle Street or doing something else, converting it to the BRT system or just something else. Until you've done an honest, objective, independent study of just what would it cost to keep going and what would the benefits be, and then compare that to the costs and benefits of the various options. At this point in time, they're just throwing money at it because nobody wants to say, we've wasted $4 billion, which is how much we've spent so far. Well, I like the idea of an audit, because it's not about being pro-rail or anti-rail at this stage. Who could be against an audit finding out what's going on? Right, seeing what the actual costs are. Well, Randy, we could go on this issue, and maybe we should have you back. But I wanted to say thank you so much for your insight and for your work in public policy. Thank you. Appreciate it. My guest today has been Randy Roth, UH professor at the Richardson School of Law. And you can get ahold of him there at the Richardson School of Law. I'm Keely Akina with the Grassroot Institute. Until next time, on Ehana Kako, on Think Tech Hawaii's broadcast network, Aloha.